Defined contribution plan

On December 29, 2022, the Consolidated Appropriations Act of 2023 (CAA 2023)—which serves to fund the federal government for a full year—was enacted. Included in CAA 2023 is a provision granting a two-year extension allowing high deductible health plans (HDHPs) to waive the deductible for telehealth and other remote care services without causing plan participants to lose the ability to contribute to a health savings account (HSA). The two-year extension is in effect January 1, 2023, through December 31, 2024.

Highlights regarding the extension are as follows:

• Telehealth services do not need to be preventive or related to COVID-19 to qualify for the relief;
• An employer is not required to waive the deductible for telehealth services;
• The relief applies on a monthly basis rather than a plan year basis. As a result, non-calendar year HDHPs that provide first dollar coverage for telehealth services must modify their plan design mid-year effective January 1, 2025;
• Employers who offer a fully-insured HDHP should contact their insurance carrier to confirm the insurer will continue to provide first dollar coverage for telehealth services; and
• Employers who will continue to waive the deductible for telehealth services should communicate this extension to individuals covered under a HDHP.

A final rule from the IRS titled “Electronically Filed Returns” has left The Office of Management and Budget.

The IRS released a proposed rule in July 2021 regarding electronic filing requirements for certain information returns, pursuant to the Taxpayer First Act of 2019. The proposed regulations reduce the threshold above which filers must electronically file from 250 to 100 returns for the 2022 calendar year. For filings required after calendar year 2022, the threshold would be further reduced to 10 returns.

A February 2022 publication of the 2022 tax year General Instructions for Certain Information Returns (Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, and W-2G) released by the IRS indicates its intent to issue regulations that reduce the 250-return requirement for 2022 tax returns, and that if final regulations are issued and effective for 2022 tax returns required to be filed in 2023, IRS will provide further communication regarding the change. Until final regulations are issued, however, the number remains at 250, as reflected in these instructions.

The House of Representatives has passed the Consolidated Appropriations Act of 2023, HR 2617, today with a 225-201-1 vote. Included in this bill is the SECURE 2.0 Act of 2022. Following the Senate’s approval on December 22, 2022, the bill will now be presented to the President for his signature.

The Senate has approved the Consolidated Appropriations Act, 2023 (CAA 2023), by a 68-29 vote. Included in this bill is the SECURE 2.0 Act of 2022.

Retirement plan assets should be invested prudently to obtain the best possible financial returns, of course. But what if your plan invests in a company that conducts business in a way that violates your ethical values? For example, is it okay for a plan administrator to buy stock in a company with a record of environmental violations and polluting with impunity? Should that behavior affect whether a company qualifies as a suitable retirement plan investment? Is it possible, or even likely, that a company that responsibly produces a similar product may actually be a better choice, measured both by investment returns and by other factors?

Senate Appropriations Committee Chairman Patrick Leahy (D-VT) has released HR  2617, the Consolidated Appropriations Act of 2023, a $1.7 trillion fiscal year 2023 omnibus appropriations bill, whose provisions will fund government operations for the fiscal year. Included in this legislation, as has been anticipated by many, is the SECURE 2.0 Act of 2022.

The Securing a Strong Retirement Act of 2022 was passed by the House of Representatives earlier this year. The Senate HELP committee approved the RISE & SHINE Act and the Senate Finance committee likewise approved the EARN Act. The House and Senate worked together to combine these bills into the SECURE 2.0 Act that has now been included in the Consolidated Appropriations Act.

Inclusion in the Consolidated Appropriations Act was considered the last opportunity for passage of this retirement legislation in the current Congress. The Consolidated Appropriations Act must now be approved by the House and Senate and signed by the President, for it—and the SECURE 2.0 Act—to become law.

Among the 90 provisions in the SECURE 2.0 Act, some of the significant items include the following.

• Allowing workers to participate in employer plans after 2 consecutive 12-month periods of 500 hours of service, beginning in 2025
• Increasing the catch-up contribution limit for select age groups
• Requiring catch-up contributions to be made on a Roth basis for those earning more than $145,000, except for SIMPLE plans
• Permitting employer contributions to be made on a pre-tax or Roth basis
• Increasing the RMD age to 73 in 2023, and age 75 in 2033
• Expanding automatic enrollment in retirement plans
• Creating a Retirement Savings Lost and Found
• Creating new emergency savings accounts linked to individual account plans
• Allowing student loan payments to be treated as elective deferrals for purposes of matching contributions
• Modifying the existing saver’s credit to provide for a matching contribution to the individual’s retirement savings vehicle
• Creating a “starter 401(k) plan” with reduced contribution limits and nondiscrimination safe harbors
• Increasing the small employer startup credit to 100% for certain employers
• Increasing the age of disability onset for qualified ABLE programs to age 46
• Allowing certain rollovers to Roth IRAs from 529 college savings accounts

Additional details on the SECURE 2.0 Act will continue to be provided. Visit ascensus.com for the latest information.

The IRS has announced the postponement of certain tax-related deadlines for victims of Hurricane Nicole in Florida. The tax relief postpones various tax filing deadlines that began on November 7, 2022. Affected individuals and households who reside or have a business in Brevard, Duval, Flagler, Indian River, Lake, Martin, Nassau, Palm Beach, Putnam, St. Johns, St. Lucie, and Volusia counties, as well as taxpayers with records located in the covered area that are needed to meet covered deadlines, qualify for relief.
 
In addition to extending certain tax filing and tax payment deadlines, the relief includes completion of many time-sensitive, tax-related acts described in IRS Revenue Procedure 2018-58 and Treasury Regulation 301.7508A-1(c)(1). Affected taxpayers with a covered deadline on or after November 7, 2022, and before March 15, 2023, will have until March 15, 2023, to complete the acts. This includes filing Form 5500 series returns that are required to be filed on or after November 7, 2022, and before March 15, 2023.
 
“Affected taxpayer” automatically includes any individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Those who reside or have a business located outside the covered disaster area, but have been affected by the disaster, may contact the IRS to request relief.

The Federal Emergency Management Agency (FEMA) has issued a disaster declaration for Hurricane Nicole in Florida, for the period of November 7, 2022 – November 30, 2022.

Employers with qualified retirement plans may allow participants to take hardship distributions if

• they have incurred expenses and losses because of a FEMA-declared disaster, and
• their principal residence or place of employment at the time of the disaster is located in an area designated by FEMA as eligible for individual disaster assistance.

If the employer permits hardship distributions for expenses and losses related to a federally declared disaster, participants can check fema.gov/locations to determine if they are located in a disaster area designated for individual assistance.

The IRS may also issue relief related to this disaster for certain tax-related deadlines. Additional information can be found at irs.gov/newsroom/tax-relief-in-disaster-situations.

The Securities and Exchange Commission (SEC) proposed rule titled, Open-End Fund Liquidity Risk Management Programs and Swing Pricing; Form N-PORT Reporting, has been published in the federal register. With publication in the register, comments on the proposal are due by February 14, 2023. Highlights of the proposal were previously announced.

The IRS has issued Revenue Ruling 2023-1, which contains the applicable federal rates (AFR) for January 2023. These rates are used for such purposes as calculating distributions from retirement savings arrangements that meet the requirements for substantially equal periodic payments (a 10 percent early distribution penalty tax exception), also referred to as "72(t) payments."